Australia will operate a new generation of nuclear-powered submarines based on a British design as both countries modernise their navies.
The Aukus deal – involving Australia, the UK and US – will see the new boats in operation in the late 2030s following a construction phase which will create thousands of jobs in the UK.
The new SSN-Aukus submarines will be in operation for the Royal Navy by the late 2030s under the plan, and will also give Australia its first nuclear-powered capability.
The UK’s submarines will mainly be built by BAE Systems at Barrow-in-Furness, Cumbria, and Rolls-Royce.
The plan could see the number of UK hunter-killer subs double.
Australia’s boats will be built in South Australia, using some components manufactured in the UK, and will be in service in the early 2040s.
Rishi Sunak, Australian counterpart Anthony Albanese and US President Joe Biden met in San Diego to announce the next stage of the Aukus programme.
As part of the agreement, Australia will buy US Virginia-class submarines in the 2030s as a stop-gap measure until the new vessels are operational.
The new submarines will also incorporate US technology.
Mr Sunak said: “The Aukus partnership, and the submarines we are building in British shipyards, are a tangible demonstration of our commitment to global security.
“This partnership was founded on the bedrock of our shared values and resolute focus on upholding stability in the Indo-Pacific and beyond.
“And I am hugely pleased that the plans we have announced today will see pioneering British design expertise protect our people and our allies for generations to come.”
The Aukus partnership was announced in 2021 as Australia sought to respond to China’s assertive actions in the Pacific.
The latest stage comes as the UK publishes its updated integrated review of foreign and security policy, which highlights China’s “more aggressive stance”.
The deal caused a diplomatic rift with France, which had expected to supply diesel-powered submarines to the Canberra government.
The £5 billion extra for defence announced by Mr Sunak will partly help develop the next phase of the Aukus programme.
This will be followed by sustained funding over the next decade and will build on the £2 billion invested last year in our Dreadnought-class submarine programme.
Defence Secretary Ben Wallace said: “This is a significant step forward for our three nations as we work together to contribute to security in the Indo-Pacific and across the world.
“Supporting thousands of jobs across the UK, with many in the north-west of England, this endeavour will boost prosperity across our country and showcase the prowess of British industry to our allies and partners.”
The Aukus programme will result in closer collaboration between the three nations.
Beginning in 2023, Australian military and civilian personnel will embed with the US Navy and Royal Navy, and in the two countries’ industrial bases to accelerate the training of Australian personnel.
The US plans to increase port visits by nuclear-powered submarines to Australia this year, with the United Kingdom increasing visits in 2026.
From 2027, UK and US boats could be deployed on “forward rotation” to Australia to help develop training and expertise.
The three nations insisted that the deal did not increase the risk of nuclear proliferation.
The vessels will carry conventional weapons and the nuclear reactors will be sealed shut and not require refuelling in their lifetimes.